Ron Paul: Why the Government Lies About Social Security

Perhaps the biggest media story of 2010 was the influence of Tea Party voters on the Congressional landscape. The new Congress comes to Capitol Hill with a mandate to end profligate spending and restore fiscal sanity in Washington, we are told. But when the House and Senate convene in January the newly elected members will face tremendous pressure to maintain spending levels for entitlement programs. Even the most modest proposals to trim Social Security or Medicare spending will be met with howls of indignation and threats of voter revolt. Legislators who propose any kind of means testing or increased retirement ages can expect angry visits from senior citizens and lobbyists ready to fund a candidate back home who supports the status quo.

But millions of Americans now realize that the status quo is an illusion that will not last even another 10 or 20 years. The federal government cannot continue to spend a trillion dollars more than it collects in revenue each year because we are running out of creditors. Fiscal reality is setting in and the consequences may be grim, even if Congress finds the courage to take decisive action now.

Courage begins with a commitment to see things as they are, rather than how we wish they were. When it comes to Social Security we must understand that the system does not represent an old age pension, an insurance program or even a forced savings program. It simply represents an enormous transfer of payment with younger workers paying taxes to benefit the other beneficiaries. There is no Social Security trust fund and you don’t have an account. Whether you win or lose the Social Security lottery is a function of when you happen to be born and how long you live to collect benefits. Of course young people today have every reason to believe they will never collect those benefits.

Notice that neither political party proposes letting people opt out of Social Security, which exposes the lie that your contributions are set aside and saved. After all, if your contributions are really set aside for your retirement, the money is there earning interest, right? If your money is in your account, what difference would it make if your neighbor chooses not to participate in the program?

The truth of course is that your contributions are not put aside. Social Security is a simple tax. Like all taxes, the money collected is spent immediately as general revenue to fund the federal government. But no administration will admit that Social Security is nothing more than an accounting ledger with no money. You will collect benefits only if future tax revenues remain high. The money you paid into the system is long gone.

My hope is that at least some members of the new Congress will cut through the distortions to see Social Security as it really is. The best way to fix the impending Social Security crisis is also the simplest: Allow younger individuals to opt out of the program and use their tax savings to invest privately as they see fit. This is the true private solution. Your money has never been safe in the government’s hands and it never will be.

289 Comments:

Mike breaks down a 60 minute interview will Ben Bernanke word for word exposing the lies and deception of banking.
Mike also breaks down Ron Paul's reply to that 60 minute interview with Ben Bernanke word for word also.
And finally mike exposes Dennis Kucinich's Plagiarisation of MPE and the world mandate in Dennis's latest reform bill.

I usually agree with all of Ron Paul’s opinions; however, I disagree with his statement on Social Security. While it is true that the government has spent the money, it spends the revenue from Treasuries that it sells. The money is owed to the purchaser.

The following is a quote from the 2009 year end report by Timothy Geithner –

“The trust fund balances as of the valuation date for the respective programs, including interest earned, are in the table shown below. Substantially all of the Social Security (OASDI) and Medicare Hospital Insurance (HI), and Supplementary Medical Insurance (SMI) trust fund balances consist of investments in special non-marketable U.S. Treasury securities that are backed by the full faith and credit of the U.S. Government.”

At the end of 2009 there was 2.419 trillions dollar surplus in Social Security. If the government takes Ron Paul’s view and says we spent the money too bad, they are defaulting on a loan. This tells the world that our government has and will default on obligations. Is that what is being proposed?

Earlier I wrote that blogging is much like masturbation. Those who participate do both in private, the former doing theirs behind aliases or web names, the latter in their bedrooms. Both get gratification without results.

Now its time for all of you whiners to get your hnds out of your pants and do something about the situation we're in. The consensus is, to o one's suprise, that Ron Paul is the smartest gut in the room. Unlike the Enron gang, he's also the most honest. You may not agree with all he says, but he's way ahead of the clowns we've elected recently, both GOP and Dems.

To find fault with all of RP's stands is irrelevant; like Obama he won't get everything he stands for (and say a prayer of thanks that BHO was thwarted in some things). But tell me who you'd rather see start the reform process, the cleanup, the real change.

Speak up in person, laying your lives, your fortunes, your sacred honor on the line for your country. Start a barrage of mail to all your friends, acquaintenances, your co-workers and above all to those elected clowns. Demand the reforms. Now. Else shut-up and go back to your closet. I'm tired of hearing this crap.

No, I haven't seen the mini-series John Adams. But, I suspect the founding fathers intended for the legislature to move slowly so that laws would be more reason based and less emotion based. I support this strategy. Unfortunately, this didn't prevent some unfortunate (in my view) decisions in the wake of 9/11.

I like your definition of natural rights and it would be wonderful if everyone respected those rights. I contend history tells us they won't.

I have a few challenges for you to consider. I figured you'd be disappoint if I didn't :). More seriously, I suspect we all hold contradictory beliefs and considering I wish I didn't, I'm irritated but ultimately grateful when others point out the contradictions. In other words, I hope you don't feel I'm in this simply to be argumentative. I genuinely believe I'm posing legitimate arguments or exposing possible contradictions.

I thought one of our few points of agreement was that a person does not have a right to pollute. But, by your definition, I have a "natural" right to pollute because I can do so without coercion or force. Correct?

You said the natural rights are in nature and every living thing asserts them. But, other than humans, how do other creatures in the animal kingdom "own" property and thereby assert their property rights? I don't think they do. If they don't, is it fair to conclude that property rights aren't natural rights because every living thing doesn't assert them?

Lastly, help me through this scenario. The government offers to enforce your property rights in exchange for a price, otherwise known as a tax. You wisely accept the offer and pay the government because your neighbor, Mr. Blackbeard is capable of taking your property and doesn't have any respect for your "natural" rights. The government, being under no obligation to charge you the exact amount it costs to provide the service, collects enough from you to provide the service and also to pay me to teach Little Susie and her friends. Little Susie and her friends get a free education without violating anyone's property rights, correct?

Hi GB, One of these times want to read something from you that says you agree 100% with me and that you have seen the light of freedom lol...oh well, until then, I will simply reply...
Coercion is simply violating another person's natural rights of life, liberty, and property. I already suggested that the air on my property is owned by me. If you pollute it, you have violated my rights and the government must "arbitrate" a solution to this "dispute". Now, this is where government must act in accordance with the wishes of their constituencies. If I "pollute" your air by lighting a cigarette in my own home and a trickle of smoke carries out the window and into your air, the government can unwisely prosecute me and give me the death penalty. Or I can burn leaves and other garbage and use a fan to funnel all the smoke onto your property, the same unwise government might fine me 50 cents. A violation has occurred in both instances. It takes common sense to have the 'punishment" fit the "crime". But, to answer your question, my liberty does not allow me to violate your property...your air.
You must not know animals if you do not know that they claim property. Have you ever seen a dog mark his territory? Or have you seen a dog fight for his toy? And, dont even disturb a nest...hornets, bees, or birds. You just might die. They own property and they do not need a government to defend it.
OK... I understand that you are not being argumentative...in most cases. You are bringing up some good questions. HOwever, the last scenario you described is baffling. You are suggesting that the government can tax a person for their protection and then with the change use the extra to provide other rights for people. You have a big screen TV. You pay taxes so that TV can be protected. The government decides all citizens have the right to a big screen TV and so they slip in a little extra tax to provide it? And you do not see how that extra tax violates a person's property rights? Two plus two is four. NO debate is necessary. I do not know how to discuss this one.
Reality is reality....there is no such thing as a free lunch...education, health care cannot be wished for...they must be paid for...from the property of others. These others are literally slaves because the fruits of their labor go to serve another master......from each according to their ability, to each according to their need. The needy become the masters, the ABLE become the slaves...Have a good night...tj

tj, you're referring to the 'free-rider' and 'public goods' arguments well documented by economists.

To add to your comments, what people don't seem to realise is, if the government has the power to tax you at will, to provide someone else's 'right' (entitlement), it is overriding YOUR rights (however that is never spoken about in the media).

One thing that worries me greatly is that I work, and save, to provide for my retirement. In 30-40 years time, when I am ready to retire, and have a sizeable nest egg, the government will look at this large nest egg and say "hey he's rich, he has so many assets, that's wrong, we must redistribute to the poor homeless people". It's the ant and the grasshopper story.

No one even seems to remember that gold was illegal to own until about 1974. Why is it illegal to own a benign object? What the government called 'hoarding', we use to call 'SAVING'. Between presidential decree and eminent domain, our private property rights are always in danger.

This comment is in response to your comments on January 2, 2011 at 11:51 am. I was unable to reply directly to that comment due to the absence of a "reply" link.

I agree with your first three paragraphs.

In your "Bottom Line" segment:

You stated "Our Government “consumes” upwards of 60% of our material wealth and converts it into non-producing capital goods, war hardware." I agree the US spends too much on war hardware, but I'm curious, how was 60% calculated?

In the end, I think most commenters are stating/implying the government is making poor decisions, behaving badly, whatever. But, why is this so? On any particular issue, if our view is the minority view, then in a republic such as ours, we shouldn't necessarily expect the majority to adopt our view, should we? If we feel strongly, we must persist in expressing our view hoping to persuade fellow citizens until our view becomes the majority view. At that point, the theory of representative democracy implies the government will adopt our view. It may take some time, but if necessary, the citizens will vote to replace the political incumbents until the majority view is realized. All is well, correct? I foresee some skepticism. So, why don't seemingly sensible views become realized?

1) The view isn't actually sensible and therefore never reaches sufficient majority status and is never realized.
2) The view is sensible, but fails to persuade enough fellow citizens due to poor communication or because the opposing view uses greater resources to combat the sensible view through some form of propaganda and/or appealing to emotions such as fear and greed.
3) The view is sensible and garners majority support, but the minority view has greater influence over our political process and therefore prevents the view from being realized.
4) Other?

In my opinion, items 2 and 3 explain why concentrations of influence are problematic for a society and it is therefore, perfectly rational for society to actively prevent it. More directly in response to other commenters, it is why I do not support the "if the free market concentrates wealth to a relative few, then so be it" position, unless I could be convinced that concentrations of wealth do not lead to undue influence over the governing process.

TAXES: Federal Income tax rate is 22% - 37% + State Income Tax rates are 8% - 14%, Cities and Counties Collect anywhere between 5% - 10%
Cumulative this Country CONFISCATES between 40% - 60% of EVERYONES earnings. Government calls the 15% FICA it withholds a contribution. But there is no money, they spend that money and leave IOU's (aka Treasury Bonds)

But worse is that our tax rates pile on top of ever higher (uncompetitive) Union sponsored wage rates.

Finally - we Ron Paul supporters are really just debating the arrangement of the Deck Chairs on the Titanic. We've built a massive socialist entitlement Sacred Cows which consume 60% of the Federal Budget and those are on auto-pilot, untouchable and increasing annually far beyond our tax collections.
Debating all these other ideas is interesting, but its really just an exercise in futility.

Unless We the People return to Constitutional fundamentals, there is little prospect of salvaging the American Economy.

I predict that the USD will collapse and our Political Elite will push us into the use of the New World Order currency., an IMF issued World Dollar currency and claim that its backed by gold. And we fools will believe them!

I appreciate your sharing your calculation. Perhaps you won't be surprised that I have a slightly different view to offer.

First, nobody, and I mean nobody, pays 37% of their income in income taxes to the federal government. I'm certain you will agree. The primary reasons for this are: deductions/credits and the nature of progressive tax rates (of which I am an avid supporter). I imagine deductions and credits don't require elaboration. The nature of progressive tax rates means a single person in 2010 would pay the top rate (which I think is actually 35%) only on income above $373,650. You, me, Bill Gates, and every other taxpayer all pay the 10% tax rate on the first $8,375 of our income. According to the CBO, the effective income tax rate for 2005 for all households was 9% and for the top one percent was 19.4%. However, income taxes aren't the only taxes citizens pay to the federal government. Again, according to the CBO, in 2005, the effective total tax rate for all households was 20.5% and for the top 1% is 31.2%.

Secondly, you originally stated the government "consumes" up to 60%, but I remain unconvinced that the government is "consuming" it, certainly not all of it. Particularly with social security, which is a pure transfer, not consumption.

I recently heard Obama claims to support a move to reduce or eliminate deductions in conjunction with lower income tax rates. I support a move in this direction and imagine there should be some consensus among our legislators. Your thoughts?

I am one of those top marginal tax bracket payers and have "suffered" for being a successful "small business" in America.
Many would say that 35% is reasonable INCOME tax and I shouldn't complain, but I don't "consume" the income for Personal use, but it's taxed that way. I leave 95% in the business to replace equipment, new hiring and to keeping my 55 employees FULLY employed.

Add to that my paying 15% on SS, (I pay the employer's matching too) [[money that I will never see again]], so I'm paying 50% out. NOW add to that gas taxes at the pump, highway use taxes of $40K for my equipment ANNUALLY, local sales taxes and guess what, 60%++ !

You Said: "Particularly with social security, which is a pure transfer, not consumption."
I like the "pure transfer", really its much more a quasi-transfer that is paying out more inflated dollars than the recipients ever paid in.

Now these "pure transfers" are FULLY consumed when the retired recipients receives them. Our government has not been "saving" the FICA withholding tax, its spent and gone. The problem is really called "unfunded mandates" aka a Socialists Ponzi Scheme that's quickly running out of money.

As for "move to reduce or eliminate deductions in conjunction with lower income tax rates"
Tax policy has always been a tool the Liberals love to manipulate.
Ergo Obama says he'll reduce taxes maybe 1%-3% but will eliminate the mortgage interest deduction a gross revenue gain for the Government, and a major hit against Home Ownership.

But again, these News sound bites are simple DISTRACTIONS
to make it appear that the Government is really attempting to be fiscally responsible. Again... debating about how the deck chairs should be arranged, when we should be lowering the life boats.

Again, from my libertarian education and perspective, you have it almost right. However, first of all, the government does not "collect" taxes, it seizes wealth at the point of a gun. (Try not paying your taxes; bad men with guns will come to your home.) And, government does not create anything of value, therefore it does not create wealth. Here is an example. When GM (Government Motors) seizes wealth from others (gets a subsidy) to make an electric car that no one wanted in the first place, but now because its price might be "artificially" low (because of the subsidy), it might be purchased, THIS IS NOT WEALTH CREATION. It is still a transfer of wealthfrom the WINNERS in the marketplace to the LOSERS. ANd, that is wealth destruction.

Ask those that lived behind the IRON CURTAIN if they felt the car they were driving was wealth? It was a piece of junk forced on them...they had few choices, nor did they have quality to choose from. Their government destroyed wealth.

As for all government being voluntary? Try to think outside of the box. Please, name the only thing that 99.99% of people would agree the role of government would be? Protect life, liberty, and property, right? I would join this government. However, there would still be some who do not even want this. Perhaps, those that live on ranches and want to protect their own life and property. Yes, these people should be FREE to do so. And, live with the consequences of their choice. They would have no claims in our courts. They would be vulnerable to any type of aggression. Yet, it would be their choice.

Murray N.Rothbard, whom Ron Paul has learned much from, would suggest that government --- in its purest form --- should act like insurance. Insurance is not mandated...oooppps, I guess it is.

You can be provocative by claiming the government doesn't collect taxes but "seizes wealth at the point of gun" all day long, but it doesn't change the facts. The government legitimately collects taxes because a sufficient majority of citizens approved it. If you strongly feel paying taxes should be optional and you feel a sufficient number of citizens agree with you, then feel free to author a constitutional amendment repealing the government's power to tax. I'm guessing you won't do so because while the former may true (you really hate paying taxes), the latter is unlikely to be true (sufficient number of people agree with you). Further, I suspect you won't garner sufficient support because too many citizens will realize the impracticality of trying to provide an "optional" common defense.

The electric car may well turn out to be an example of poorly allocated capital. The point I'm trying to make is the whether the capital is poorly allocated depends on the strength of the idea, not the source of the funds. The public sector and the private sector each at times allocate capital poorly and at time allocate capital well.

We've strayed quite a bit from the original topic of this article, which was social security. To summarize my position, I think we have a few points of disagreement.

1) I questioned the notion of allowing people to opt out of social security. My two main concerns remain unaddressed. My concerns are: people opting out will increase the cash flow imbalance; and I contend there an increase in the number of people opting out will increase the number of people unable to support themselves in retirement.

2) I am disputing exaggerated and provocative claims that the government cannot create wealth or that it can only destroy wealth. I do not dispute the private sector may be better at allocating capital than is the public sector. The free market is not infallible and the government isn't entirely fallible.

3) I do not share a disdain for paying taxes or the feeling that I am a victim upon which the "government" keeps imposing. In either the private sector or the public sector, I can weigh the total costs and benefits and make a choice. If I prefer Pepsi to Coke, I pay for Pepsi. If I prefer living in the United States to Canada, I pay to live in the United States. When the United States poorly allocates the money I've traded to it, I'm no more annoyed than when Pepsi poorly allocates the money I've traded to it. If I invest money with Pepsi and I'm unhappy with the direction of the company, I express my concerns, I vote for others to serve on the board of directors, and ultimately may need to move my money elsewhere to a company more closely aligned with my preferences. If I'm unhappy with the direction of the United States, I express my concerns, I vote for representatives who share my concerns, and ultimately may need to move elsewhere to a country more closely aligned with my preferences.

I hope I am not too much of an annoyance. However, I did want to clarify a misconception you might have about me and other Ayn Rand Objectivists. We are the ones who accept reality. We do not try to persuade others; we do not try to "fight the establishment". It might serve you well to read Atlas Shrugged --- if you wanted to understand us. In this masterpiece, Ayn Rand's heroes (John Galt and others) did not try to fight society. They did not try to convince society that they were headed for destruction. And, in the story, the USA did eventually crumble. The heroes did what you suggested. They simply left. The smartest, most productive members of society simply disappeared; theywent on strike. They formed their own community. And, in the end, when society collapsed at the hands of "the looters" --- government wealth destroyers --- the heroes returned.

The USA is headed this way. So many things Ayn Rand wrote about in this book (1957) have come to be --- health care, the Community Reinvestment Act, the collapse of the dollar and the banking industry. Social Security is next.

I do not intend to convince you of anything. Reality is reality. Insufficient funds, pal. Not enough to pay the social security debt. So, "ALLOWING" people to opt out is only relevant when you consider your attitude.

Liberals, progressives, law and order government proponents actually believe one adult should have the power to ALLOW another adult to do something or not. I simply cannot comprehend this. But, since you won't ALLOW me to opt out, I guess I won't.

oh, and one other thing please. "The free market is not infallible," you claim. It depends on what your definition of infallible is. The free market is.....It is an absolute. It is completely and perfectly rational and reasonable. It is nature. It cannot be altered. People will ALWAYS act in their own self-interest --- even if their self-interest is altruism. So, when oyu say the free market is not infallible, I believe you are placing a judgment on its results. And, you are correct. Businesses will fail in the free market. Is this what you mean by being infallible? Because of course, businesses that fail must be a bad thing. But, the wonderful "invisible hand" of free market capitalism is INFALLIBLE in its merciless treatment of poorly allocated spending and investing. Thank goodness we have a less than fallible government to step in and save us from the consequences of poorly invested capital by investing more capital in the poorly invested investment. TOO BIG TO FAIL? Not when liberals like Bush and Obama are running things.

Trust freedom, before it is too late --- otherwise, accept your consequences....

I appreciate your concern, but no, you aren't too much of an annoyance. I imagine if I were being too much of an annoyance, you would simply ignore me. On the other hand, I'll apologize in advance for my relatively lengthy posts. I appreciate your time.

I'll take your advice and read Atlas Shrugged. Perhaps you will acknowledge the irony of stating that Ayn Rand Objectivists are the realists and then suggest it might serve me well to read a fiction novel

I don't view these kinds of discussions (or even arguments generally) as being adversarial. On a range of topics, I'm interested in views of others, more so if different from mine. With any luck, at the end of the discussion, each participant will have improved his understanding of the topic, and perhaps with a great deal of luck, one or more participants will detect a flaw in their own reasoning and adjust accordingly.

As I've said, I don't find it particularly difficult to restore social security to a sustainable, self-sufficient program. But, if the broader point is the level of government debt, I agree, it is a bit disconcerting. But doesn't it make you wonder why people continue to voluntarily lend money to the government?

Your notion of some segment of the population opting out of being governed is interesting, but unrealistic and impractical in my view. I think the reality is populations throughout history have gravitated toward some form of collective government. I suspect there must be a reason. Regarding a collective defense, I'm wondering what portion of the population would, in their own self-interest, opt-out knowing full well if the government is protecting my neighbors, the government is almost certainly implicitly protecting me. In other words of course, one gets the benefits without paying the costs. Pollution is another issue where I don't feel strict individualism is practical. Do you feel individuals should have the freedom to pollute the air and groundwater, and if so, why? Nobody owns the air. There isn't a "market" for air.

No, I don't mean businesses will fail when I contend the free market is fallible. As wonderful as the free market system can be, I contend that a pure free market system without any government interference will produce the same result as socialism and for the same reason: concentration of influence over the means of production and allocation of resources.

You mentioned the "invisible hand" is infallible. Of course, you could be right, but my experience as an independent consultant at a variety of large corporations tells me wasted resources and poorly allocated capital is far from scarce in the private sector. And some of these companies have been around for more than one hundred years. Again, in my view, there is waste and malinvestment in the public sector and in the private sector. Neither surprises or bothers me very much. In reality, that is just the way it is and always will be.

I've been thinking about your question: "Please, name the only thing that 99.99% of people would agree the role of government would be? Protect life, liberty, and property, right?" I'll respond slightly out of order.

Life. I contend the significant percentage supporting the death penalty implies that life cannot be on the list. I contend any rebuttal which suggests we, the collective, must destroy some life in order to preserve a net increase in life is neither more or less defensible that an assertion the we, the collective, must destroy some principles of the free market in order to save the net benefit of the free market.

Property. More specifically, private ownership of property. Government enforcement of your right to property is nothing more than government infringing "at the end of the barrel of a gun" upon my right to take it from you if I can. Nonetheless, we could very well reach an overwhelming consensus on this one.

Liberty. I contend supporting private property rights implies that we are willing to make tradeoffs concerning liberties. In other words, the question of protecting "liberty" is much too broad. In reality, the questions are some form of tradeoff between liberties. People are either at liberty to do as they please, i.e. steal, or they are not. Who decides which liberties we have or don't have? You? Me? Should we vote on it? Other? Please don't tell me about "natural" rights which will simply beg the question of who decides which rights are "natural" rights. Well, voting seems rational, but that sound like the system we already have. Perhaps the structure of the system is fine, but you would prefer we raise the threshold for passing laws. Rather than the 50%-60% percent necessary to pass a law, we should raise it to what? 99%? Well, 99% seems extreme to me. but I'm wondering what you think?

Hi GB,
Well I will comment on your first note by identifying 6 issues. First, social security is unsustainable and only drastic masures will save it. In 2011, more people than ever will file for first time benefits at the time when unemployment is 10 per cent. And that number will rise for the next 30 years.
Second, you asked why so many still loan to the government. Ask the Chinese if they are still investing in US Treasuries...the answer is now GOLD for them.
Hird, the American tradition of free markets is NEW. Societies have not trended towards centralization...they always were centralized...always under tyrants like kings. The trending towards centralization in the US is due to a lack of vigilance by freedom loving people.
Fourth, the opt out theory is just a theory. Ow many would opt out...only those that live o those ranches and want to form their own society. Most people (99.99%?) would certainly CHOOSE to pay for protection in our courts just like most people pay for insurance on their homes.
Fifth, air is owned and you are not allowed to pollute mine. IF you do, you will pay whatever penalties our government leaders have determined. This is the basic function of government ... to protect property. Libertarians are not anti environment.
Finally, you contend that capitalism like socialism will result in too much concentration of power. You have bought into the fallacy perpetrated by Progressives over 100 years ago. Do you realize that since 1890 Sherman AntiTrust Act it has literally been illegal to be in business in the USA. The Justice Department has PERSECUTED at their whim companies for charging more than their competitor ...they must be a monopoly if the can do this...less than their competitor...they are trying to become a monopoly...and the same as their competitor...collusion. If this POWER existed...like you say it does...a company like GM would never have needed a bailout. They certainly fit your description of a high concentration of wealth. Yet, they probably were similar to some of those wasteful 100 yr old companies that you consulted for. Everyday, several times a day, everyone votes in the marketplace. Winners and losers come and go in free markets. It takes every two to four years to vote for fewer choices to impact government. Yet, you fear corporate wealth as much as government?

1.) We are unable to find any common ground here. Social security is not a difficult problem to solve. Medicare is a difficult problem to solve. To return social security to fiscal stability we just need to raise the retirement age and means test benefits. I'll add another, the cost of living benefit adjustments should be tied to wage growth, not price inflation, because wages are the source of the funds. If that is still insufficient, then raise or eliminate the wage cap on the individual portion for paying social security payroll taxes.

2) I agree the trend is bad news for the US. Some of our most prolific creditors are diversifying away from the US dollar.

3) Perhaps I'm thinking back a bit farther back than you. I'm thinking hunters and gathers. Formed groups generally for specialization and protection from other groups. When size of group becomes unwieldy, the group chooses a subset to represent the group. If your point is that far too often, once appointed, this subset abused their power, I agree with you.

4) What happens if the .01% of people opting out of being governed, for example, pollute the air?

5) I'm not sure why you think air is owned (unless you mean collectively), but I'm glad we agree individuals are not entitled to pollute it. Therefore, it is perfectly rational for the collective to prevent it. I contend this is an issue regulation will solve more effectively than will the free markets, largely because there isn't a market for air.

6) You have inferred my position correctly. I fear concentrations of private wealth as much (or as little) as I fear government for mainly two reasons:
6.1) If you'll accept a voting metaphor in the free market, that is to say, people "vote" with their dollars, then I agree people get to vote much more frequently in the marketplace which is good, but those with concentrations of wealth have considerably more votes, which is very bad.
6.2) If I were to judge government to be failing, I think it is considerably more likely that politicians were disproportionately influenced by a minority with the most wealth.
Your example of GM doesn't persuade me because GM was owned by thousands of shareholders. BUT, here's what could sway me. I believe what economists call mobility. If I were to see let's say an annual list of the top 5% of wealth owners. I can't say exactly where I would draw the line, but if the list changes significantly over the years (other than deaths of course), I would alter my view and adopt your view that winners and losers come and go.

GB, Did you ever see the miniseries JOhn Adams? He chastised some colleagues and suggested that if someone said 2 plus 2 was 5, they would have to debate on it for hours and then take a vote on it.
The natural rights are not up for debate...they are in nature and every living thing asserts them. By living, you are asserting your right to life; by owning, you are asserting your property rights; and by doing or thinking as you please, you are asserting your liberty.
The way you can tell the difference between natural rights and other rights is if coercion or force is necessary to claim a right. YOu see, no other rights can exist without violating one of these three rhts. The right to a free education must be secured by violating someone s property rights...and so on.

Having just read "When money Dies", it almost seems as though we are already experiencing many things Germany (1918-1926) went through but without actually printing the dollars, but we're experienceing it over a much longer period of time. We've had the huge price acceleration in capital assets (housing bubble); a credit squeeze precipitated by central government intervention; massive unemplyment (and still growing); and though we rarely hear about it, widespread loss of purchasing power.

I think the issue is what is wealth? It is properly defined as anything that has value to the free, non-coerced individual. So, when a big, bad corporation engages in economic activity, it is CREATING wealth because individuals voluntarily purchase their goods or SERVICES. When the government is the CUSTOMER, it can only be a CUSTOMER by FORCEFULLY seizing someone else's wealth.

The government seizes wealth...a corporation must CREATE wealth in order to survive. This big, bad corporation (like Walmart) only became "big and bad" because they did something right --- they created value for consumers. They did not TAKE anything from them. Walmart's customers "love" Walmart or else they would go someplace else.

Nevertheless, I feel I might be preaching to the choir. We probably all agree that the government spends too much, regulates too much, and taxes too much.

What are you going to do America when reality hits home,and your money is not worth the paper that it is printed on? For within two years our Currency will not be worth a damn thanks to the Creed,Corruption,and or Lies that our own Government has lead us to believe through the years like sheep to the slaughterhouse We The People were lead to believe their evil lies within the bailing out of banks,and or corporations,and the rich,and or powerful, who purchased our corrupt congress for a price to betray The American People,and or kill the American dream.Ron Paul is one of the very few within congress that is not corrupt by the donations of the rich to buy a vote within congress,for his vote could never ever be purchase to benefit the rich,and or powerful, and their agenda,for within Ron Paul eyes The American People,and or Our Constitution Of The United States Of America is not for sale for any price! Respectfully Steve Peterson Rommel, Arkansaw,Wisconsin

Joseph Stalin once said about his Communism reforms that
"you must break some eggs (people) to make an omelet"

Winston Churchill, replied...
"Where's the omelet?"

Socialism is forever consuming other peoples wealth until it has ALL been consumed
And
Then they DEMAND that the Producers produce more wealth AFTER their wealth has been taken and wholly consumed.

Social Security is the perfect example of this Socialist lie.
The Progressive Socialists have promised a benefit, taxed the citizens for decades, and are now in default of delivering the promised benefits, because they consumed the wealth in other Social spending schemes!!!

I'm enjoying our conversations, but of your postings, this is my least favorite. I know you care deeply about my opinion.

Precisely, what is the lie about social security? The article suggests the lie is that the government doesn't really set aside the money you paid in in a separate account just for you. I certainly agree the money isn't set aside in an account just for you, but I'm not aware of any government official stating that is social security works. Can you provide a link to a video or transcript of this alleged lie?

And can you describe precisely how social security is "now in default of delivering the promised benefits." Social security has not "defaulted" in any sense of the term with which I am familiar.

With all due respect, cannot believe the number of Rogressive fools that come on a site like this. They want to present their PLAN for "society". And, they discuss wealth as if it is fixed and influential. Wealth is NEVER fixed and one person's wealth accumulation has NEVER diminished another person's wealth potential. If one person in a society owned everything, the moment this person desired a service (and by the way, a service is wealth), this person would no longer have all the wealth...and so on. Wealth was CREATED it was not redistributed. Wash someone's car for 5 bucks and wealth was created nott redistributed. Find a piece of wood and carve it into a piece of art or a handy tool and wealth is created...not shared.
Wealth creation is UNLIMITED. However, when it is redistributed for consumption and nothing of value created, wealth is destroyed. Government does not create wealth; it only destroys it.
Won't anyone please read Atlas Shrugged?

With all due respect, I fail to understand your claim that Government does not create wealth, it only destroys it.

You said washing someone's car for $5 constitutes wealth creation. If the government pays me $5 to wash a government vehicle, has wealth been created, redistributed, or destroyed? In this case, the government is the consumer of a service.

Similarly, if I offer to guard your house from intruders and you pay me $5, I imagine you consider this wealth creation. When the government employs police officers and military personnel, has wealth been created, redistributed, or destroyed? In this case, the government is the provider of a service.

Therefore, if the government cannot create wealth by being either the provider or the consumer of a service, the only plausible argument I foresee is to claim only individuals can create wealth. With this reasoning, wouldn't it be equally valid to claim that corporations cannot create wealth? Further, if only individuals can create wealth, wouldn't it also be true to claim only individuals can destroy wealth?

TJ,
Many economists would argue that "real" wealth is created ONLY when raw materials are converted into useful material assets that generate time savings or durable long lasting creature comforts, housing, food, clothing, transportation etc.

Services do not create wealth since they are consumption of existing wealth supplementing what individuals would normally do for themselves. Thus "Services" create jobs but NO wealth, other than Leisure for the owner of the wealth who is consuming it by paying for those services.

Thus a "Service Economy" (like the USA) does not really create any wealth. The "gray area" exception might be when Hotels, Cruise Ships or other Leisure Assets are built as a means of capturing those consumption dollars.

Bottom Line...
- Government CONSUMES wealth, by providing "Constitutional mandated" essential "services",
1. Border protection (their doing a marginal job there),
2. Common Defense (now actually OFFENSE in pursuit of world dominance)
3. Rule of Law, maintaining the law and order
AND FINALLY
4. Wealth Transfers >>> NOT Constitutionally mandated but spending that is simply Social CONSUMPTION, transferring from wealth producers to wealth consumers.

Citizen, I still do not understand how, using your examples, paying for border protection, common defense, and maintenance of law and order (all valuable services) is consuming wealth. Each of these examples is a wealth transfer. The government collects money from citizens and uses the money to pay the salaries of border patrol officers, military personnel, police officers, politicians and so on.

Much like the private sector, the government plays a role in creating wealth, redistributing wealth, and destroying wealth. When government uses the money it collects to:
a.) fund projects which improve productivity, it is creating wealth;
b.) pay salaries of government employees, it is redistributing wealth;
c.) pay money to citizens for programs like social security and welfare, it is redistributing wealth;
d.) fund projects which fail to maintain or improve productivity, it is destroying wealth.

Wealth is both created and consumed. Consumption can be either Personal and Public, as such it is not a "bad thing" but when Consumption far exceeds Production (wealth creation) then we are in perpetual deficit living, spending what we don't have.

As a Nation, the US of A has gone well beyond its economic ability to produce and replace its material goods (wealth). We have a become mostly Consumers of Wealth with little regard for replenishing that which we consume. Other nations are producing for us, thus we've delegated our wealth creation to others and have sold our souls in the economic marketplace.

Essentially we are depleting our storehouse of wealth and we putting our very material survival in the hands of others... Not Good.

Bottom Line:
Our Government "consumes" upwards of 60% of our material wealth and converts it into non-producing capital goods, war hardware. The private sector is not producing material goods to replenish our Private Wealth, we can not compete in the world market and we are consuming our Private Capital savings/wealth.

Our military industrial complex IS wealth, ships, plans, tanks etc., but this wealth NO Private utility use. Thus Mal-Investment has occurred, we've put too much into bullets and neglected the butter.

I suggest you read the writings of Murray N. Rothbard who suggested that all government should be voluntary.

Government does not create wealth; it only confiscates it at the end of the barrel of a gun (taxation is coercion). I had a feeling someone would challenge me on this. That government car you are referring to, was confiscated from the wealth producers.

Wealth, by definition, must have value. And, for value to be assessed, INDIVIDUALS must be free. The government can spend $50 million to study the mating habits of earthworms. No wealth is created because free individuals did not voluntary exchange goods and services in the marketplace. The government can pay someone to move a pile of dirt from point A to point B and back again --- no wealth is created.

I get a kick out of progressives who claim that giving loans to corporations who pay them back was a good "business" decision for the government. It created revenue. What is never understood is that if these corporations could not get a loan in the market place, they were subsidized at the expense of good, strong, wealth producing companies. These companies --- the winners in the market place, the real wealth producers --- were harmed by this government imposition in the market place.

(In other words, building an electric car that people do not want, is not creating wealth, now is it?)

TJ, what do you mean all of government should be voluntary. Are you or Mr. Rothbard suggesting that following the laws passed by government should be voluntary? The enforcement of private property rights should be voluntary? Doesn't capitalism rely on government enforced private property rights?

Why do you feel taxation is coercion? American citizens granted government the power to tax via the constitution.

Consider taxation, income tax rate should be based on wealth, not on actual income. It is hard to get blood from a stone. The goal is to create more people having wealth. People with wealth can afford taxation. Someone with zero wealth, would pay zero taxes on income. Someone with a million dollars of assets, would pay 50% tax on income. The goal is to create wealth which makes it possible to pay taxes.

I'm gratified, personally, that my "Plan" got this many comments. Sadly, I feel most did not read it through. Anyone who's really interested can email me at tbeebe6535@yahoo.com for an Excel spreadsheet to figure their household's taxes at whatever tax rate and minimum wage-based personal exemotion they choose. For those who are concerned about how they'd fare with this IN LIEU OF SOCIAL SECURITY (I agree with all who say its a broke Ponzi scheme), I suggest they figure their tax as a household of one. Note that with a minimum wage of $8.00, their personal exemption would be $8.00/hour X 2000 hours/year X 2 (the 2 from the rate for age 70 and older). That's a $32,000 exemption. If the tax rate was 40% (not far from what you pay now, if most of it was not concealed from view, and you had NO income, you'd get 40% of that exemption or $12,800 ($1,066 per month). I suggest that's comparable to many Social Security payments. To those who want "means testing", aren't you going back to the Obama method of "spreading the wealth around"? Actually, this plan addresses that concern by taxing everybody's DISPOSABLE INCOME equally, and taxing their basic needs not at all. Who's got a problem with that? I hope you'll reread my plan, posted 12/29 ar 12:20PM and print it out, if possible. As I keep saying, its about a lot more than tacrs.
Keep the comments coming.

Tom, unfortunately, I don't at the moment have any feedback on your plan. But, being someone who suggested means testing social security, I felt compelled to respond to a portion of your comment.

First, I think social security (old age benefits) is (or at least should be) an insurance program. In my view, paying into social security is similar to paying for other insurance programs (house, auto, etc..). In each of these cases, a number of people contribute while only a subset of the contributers, who demonstrate a need, receive benefit.

Second, if my choices are either "spreading the wealth around" or "concentrating the wealth within a small group", I definitely prefer the former.

I prefer letting wealth find its own way. A person's income should be commensurant with their productivity. As I heard Milton Friedman once ask Phil Donahue: "who are the angels who possess the wisdom to allocate wealth better than does the market?" Should he market concentrate wealth among a few, so be it. However, a re-reading of the plan will indicate that I propose taxation which exempts the basic necessities (non-disposable income) from taxation. Thus I neither spread wealth around nor concentrate it among a small group. Instead I let wealth accrue to those who produce it, as determined by market forces, but exempt that part of wealth (income) necessary for a decent standard of living from taxation. Is this fair in your mind? I'm really iterested in your point of view.

I contend item 8 of your plan constitutes "spreading the wealth" around, about which of course, I don't necessarily have any qualms.

On one extreme the total wealth of a society is owned precisely equally by each member, and the other extreme, the total wealth is owned by a single member. I don't think we should desire to be at either extreme, which means the question isn't "whether" the wealth should be spread around, but to what degree it should be spread around. Similar to you, I think the "market" should be allowed considerable discretion in this regard. But, I think the market is fallible and society is intelligent enough to realize it and compensate for it.

More specifically, I contend societies should actively avoid concentrations of influence. In a socialist society, the central planners represent a unhealthy concentration of influence and therefore socialism is destined to fail. In a capitalistic society, I think wealth equates to influence. Therefore, when wealth becomes overly concentrated, influence is overly concentrated, and capitalism will fail just as surely as socialism fails.

My answer to the question "“who are the angels who possess the wisdom to allocate wealth better than does the market?” is "the very same angels who constitute the market". Members of society make up this economic entity we refer to as the "market", and those same members of society elect the representatives of a rule making entity we call the "government".

You asked if I thought it is fair of your plan to exempt income necessary for a decent standard of living. My answer is mostly yes, but when I find some more time, I'll reply directly to your comment describing your plan.

I believe we uderstand the angels of "fairness" do not exist in our government; politics too often corrupts mere mortals before they become angelic.

My plan states that the indisposable income, represented by the minimum wage, set each year by congress, should not be taxed and a flat rate applied to the shortfall of a household below that income would be remanded by governments to address the needs unmet by the market, while the same rate applied to that above the indisposable income would represent a combination of two factors: that from which the above supplement is drawn and that necessary for the maintenance of legitimate government services. Nothing perfect about this except for what I consider its most important factor, it represents no favor to any special interest.

That lack of favoritism is the most important principle upon which the plan is based. I recall seeing a congressman red-faced in his vegemence about the sancity of home ownership. Promotion of that special interest is what brought us the mortgage bubble. Similarly, the gay community has been adamant about gaining equal status, particularly with married hetrosexuals. This is the reason for the creation of the "households" as the taxed unit. It treats all equally. Marriage to me is a religous institution (sacrement?). Basing government policy on such a religous institution, however noble and however much it has served humanity, is a violation of "Equal Justice Under Law". I'll leave it to others to decide the same sex marriage issue; perhaps it should not even be decided in the political realm.

Finally, in my experience, these threads get broken when a website abandons them, so along with my feeling that any belief worth consideration should not be posted anonymously, I freely give my email for all to address. It is: tbeebe6535@yahoo.com

Wealth, in my definition, is anything possessed by one person (or economic entity such as a corporation or government) that is of value to another. Given this, ideas of domination of wealth by one, or even by a few, is unlikely, even impossible. The wealthiest among us has need for and, absent means of coercion, will exchange some portion of his wealth for the wealth (material possessions, labor, etc) of another. What creates wealth? I have suggested a workforce that is healthy, educated and equipped (provided with tools) to produce that which is desired. Thus I have excluded the income that is employed to provide these three things from taxation. After all, it is in the government's interest that such wealth be created, for its possession or exchange represents property or income upon which taxes may be levied.

I prefer income tax over property tax as the former rests upon and thus encourages economic activity which benefits all, while the latter rests upon the possession of wealth which can too easily be concealed from the dreadful fellow, the tax man.

I would stop at a plan based on taxation of all income, less that accorded to these three activities, but for a concept most recently described by the SCOTUS in their "Citizens United" case, wherein they postulate that some form of relief must be given to our lowest class (least productive) lest civil unrest ensue.

Then, if we are to reduce the income of the productive by some rate (tax) does it not also follow that this asssistence would be similarly reduced? My plan (for those who haven't seen it in here, email tbeebe6535@yahoo.com for a copy) imposes a flat rate on all "disposable" income. I hate taxes for each penny collected diminishes the reward to those who have produced wealth of any sort. Yet it has been said that there is nothing sure but taxes and one alternative, and only the alternative is less desireable.

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